* FTSE 100 up 0.7 percent
* Oils higher; BP rallies as bad news abates
* Drugmakers higher on Barcap upgrades
By David Brett
LONDON, June 10 (Reuters) - A rally by embattled oil giant
BP <BP.L> contributed half of the 0.7 percent gain by Britain's
top share index on Friday, while strength in drug stocks also
helped counter a weaker showing by banks.
By 1112 GMT, the FTSE 100 <> was up 36.89 points at
5,169.39, having closed 0.9 percent higher on Thursday.
BP added 8.4 percent, rallying after recent sharp falls as
the flow of bad news from the oil slick disaster in the Gulf of
Mexico abated, and investors focused on hopes that the firm may
just reduce dividend payments rather than suspend them.
U.S. President Barack Obama and senior administration
officials will meet BP chairman Carl-Henric Svanberg next
Wednesday, the White House announced on Thursday.
[]
"BP seems to be turning the corner and gradually getting
more and more of this oil on board which is good news. There's a
little less fear and panic out there at the moment," Panmure
Gordon analyst Peter Hitchens said.
BP's valuation has dropped to just over 70 billion pounds
($102 billion) versus over 120 billion pounds when the Gulf of
Mexico disaster began in April.
Other energy shares, which have fallen back as sentiment
towards the sector deteriorated as BP's crisis has rolled on,
were also higher, with Royal Dutch Shell <RDSa.L> and BG Group
<BG.L> up 1.4 and 0.9 percent respectively.
Overall, however, trading was light in London, with turnover
at around 30 percent of the average daily volume.
"It would not surprise me if most investors are actually
waiting for the kick off to the 2010 World Cup than looking at
the markets today, Joshua Raymond, market strategist at City
Index said.
"My assumption would also be that this could be a familiar
occurrence over the next four weeks as the World Cup continues."
DRUGS WANTED
Positive broker comment lifted drugmakers GlaxoSmithKline
<GSK.L> and AstraZeneca <AZN.L> up 1.8 and 1.6 percent,
respectively. Barclays Capital raised its rating on both firns
to "overweight" from "equal-weight".
Positive broker comment also helped Eurasian Natural
Resources <ENRC.L>, up 1.4 percent, as HSBC upgraded its rating
for the Kazakh-based miner to "overweight" from "neutral" citing
valuation grounds.
Meanwhile, M&A news boosted sentiment towards insurers after
mid cap Brit Insurance <BRE.L>, up 20.5 percent, confirmed it
rejected a takeover offer. []
The insurance underwriting sector has long been seen as a
candidate for consolidation and Brit's mid cap peers benefited
from the news, with Amlin <AML.L>, Catlin <CGL.L> Hiscox <HSX.L>
and Beazley <BEZG.L> adding 1.2 to 6.4 percent.
Blue chip insurers also gained, Aviva <AV.L>, Legal &
General <LGEN.L> and Admiral Group <ADML.L> up 0.7 to 1.9
percent.
But on the downside, banks fell back as a recent recovery by
the sector reversed. Standard Chartered <STAN.L> was the biggest
FTSE 100 faller, down 2 percent, as the emerging markets bank as
trading began on Friday in its new Indian shares at a discount
to the London-listed shares.
Part-nationalised Lloyds Banking Group <LLOY.L> and Royal
Bank of Scotland <RBS.L> both shed 1.7 percent, but Barclays
<BARC.L> and HSBC <HSBA.L> managed to add 0.8 and 0.1 percent.
Britons' expectations for inflation over the next 12 months
jumped to 3.3 percent in May, the highest level in nearly two
years, a quarterly survey from the Bank of England showed on
Friday. []
Wall Street futures pointed to a slightly higher open ahead
of U.S. May retail sales data, due at 1230 GMT, and the first
reading for June's Reuters/University of Michigan consumer
sentiment index, due at 1355 GMT.
(Editing by Hans Peters)
